Philippines to lead ASEAN in economic growth

For 2023, 2024

MANILA, Philippines — The Philippines will emerge as the fastest growing economy in the Association of Southeast Asian Nations (ASEAN) despite an expected slowdown over the next two years, a regional bank said.

Malaysian banking giant Maybank said the gross domestic product (GDP) growth of the Philippines may slow to 5.2 percent this year before rebounding to 6.5 percent next year.

Philippine economic growth accelerated to 7.6 percent in 2022 after emerging from the pandemic-induced recession with a 5.7-percent expansion in 2021.

The country booked a 9.5-percent contraction in 2020 as the economy stalled due to strict COVID quarantine and lockdown protocols.

Despite the slowdown, Maybank said the Philippines would be the fastest- growing economy in the region, with economic growth expected to average four percent this year and  4.7 percent in 2024.

The Philippines’ growth for this year is faster than Indonesia’s five percent, Vietnam’s 4.8 percent, Malaysia’s four percent, Thailand’s 2.9 percent and Singapore’s 0.8 percent.

The Philippine economy grew by 5.3 percent in the first half, below the government’s six to seven percent target, after slowing to 4.3 percent in the second quarter from 6.4 percent in the first quarter.

For 2024, the GDP expansion of the Philippines is faster than Vietnam’s six percent, Indonesia’ 5.2 percent, Malaysia’s 4.4 percent, Thailand’s 3.6 percent and Singapore’s 2.2 percent.

Economic managers through the Development Budget Coordination Committee (DBCC) penned a GDP growth of 6.5 to eight percent for 2024.

Maybank said growth drivers for the brighter 2024 for ASEAN include strong GDP growth in the US, driven by deficit spending and generous subsidies for semiconductor and electronic vehicle manufacturers as well as the shift and normalization in global consumer spending toward goods as revenge spending in domestic services fades.

The Malaysian banking giant also noted that the replacement tech cycle, falling US inventories and bottoming out of commodity and chip prices would help drive ASEAN export growth going into 2024.

“Nascent signs of recovery have emerged in trade and manufacturing data in the ASEAN-6,” Maybank said.

Aside from stronger trade recovery, Maybank said another positive lift for the region could come from higher foreign direct investments due to manufacturing supply chain shifts.

Maybank said risks remain high that the green shoots might wither even before reaching 2024, as global growth has been uneven with strong momentum in the US, weak activity in the European Union and subdued demand in China.

“Nonetheless, ASEAN economies as a whole are in a good position to weather such disruptions, due to reduced external debt and resilient labor markets,” it said.

According to Maybank, inflation has also receded to more comfortable levels across ASEAN, except in the Philippines.